Tom Brake Accuses Minister of Forcing Councils to Increase Council Tax at Double the Rate of Inflation

2.18.00pm UTC (GMT +0000) Thu 30th Nov 2006

Tom Brake MP for Carshalton and Wallington

On Tuesday Tom Brake MP for Carshalton and Wallington and Lib Dem Local Government Spokesman responding to a statement in the House of Commons made by the Minister for Local Government, Mr Phil Woolas, accused the Minister of forcing Councils to increase Council Tax by double the rate of inflation.

In his reply to the Minister's statement Tom Brake said, "Does the Minister not accept that it is his settlement of 2.7 per cent. for many authorities (including Sutton Council), combined with public sector inflation and the financial impact on local authorities of the cuts in many Primary Care Trusts and many Acute NHS Trusts, that make inevitable an increase in council tax of double the rate of inflation, hitting the poorest-often our senior citizens-the hardest?"

Sutton's PCT and Acute NHS Trusts have to make savings of £34 million which is widely expected to have a significant knock-on effect on the Council's budget.

Mr Brake went on to say, "Is it not time he stopped punishing local authorities? Instead, he should congratulate them on moving forward with the Gershon savings at a rate that central Government cannot match. He should introduce a local tax based on ability to pay, give local councils control of business rates, allow fair votes for local elections and scrap the hundreds of targets that are imposed on local authorities by his Government."

In his response to Mr Brake's comments regarding the impact of deficits in the NHS on Council budgets, the Minister had no comment.

ENDS

Notes to the Editor

The full exchange between Mr Brake and the Minister is listed below.

HANSARD

28 Nov 2006 : Column 975

Tom Brake (Carshalton and Wallington) (LD): I commend the Minister for making the statement available much earlier than is usually the case. I congratulate the Government on moving to a three-year settlement, which will allow local authorities to plan much more effectively. However, it will not have escaped Members' attention that the Labour manifesto pledge back in 1997 to abolish universal and crude capping has still not been delivered. We do not have crude and universal capping. What we have is a benevolent Minister who reluctantly uses his reserve capping powers but achieves the same end, and our strong and prosperous communities still have to dance to his tune.

The Minister neatly side-stepped the question from the hon. Member for Brentwood and Ongar (Mr. Pickles) about whether and when Sir Michael Lyons' report would be published. I hope he will answer that question

28 Nov 2006 : Column 976

on the record. In relation to the three-year settlements and picking up a point that has just been made, can the Minister confirm that those will be sufficiently flexible so that if a local authority experiences a swift change, such as inward migration, or if the census data prove to be inaccurate, it will be possible during that three-year period to adjust the settlement?

On the 2007-08 announcement, does the Minister not accept that it is his settlement of 2.7 per cent. for many authorities, combined with public sector inflation and the financial impact on local authorities of the cuts in many primary care trusts and many acute trusts, that make inevitable an increase in council tax of double the rate of inflation, hitting the poorest-often our senior citizens-the hardest? Is it not time he stopped punishing local authorities? Instead, he should congratulate them on moving forward with the Gershon savings at a rate that central Government cannot match. He should introduce a local tax based on ability to pay, give local councils control of business rates, allow fair votes for local elections and scrap the hundreds of targets that are imposed on local authorities by his Government.

Mr. Woolas: The 2.7 per cent. floor that the hon. Gentleman mentions benefits his own authority, which is a floor authority. Without the floor, there would be a significant shortfall, and the hon. Gentleman and his colleagues would no doubt lobby me for the floor. I therefore expect a letter of thanks for it, although I doubt whether that will be in the Christmas box for the Woolas office this Christmas.

The Lyons report will be complete by the end of the year. [Hon. Members: "Will it be published?"] Of course it will be published. [Hon. Members: "When?"] The hon. Members for Brentwood and Ongar (Mr. Pickles) and for Carshalton and Wallington (Tom Brake) will have to be patient. That approach was used in the past with the Layfield review and other independent reports.

The answer to the question about three-year settlements is yes, because the settlement takes into account the updated data.

On council tax increases of twice the level of inflation, I repeat that the 5 per cent. figure to which I referred last year and this year is the national average, so it does not mean that council tax will rise by 5 per cent. in every authority. Council tax is set by individual local authorities, which has been the case since its introduction.

On hitting the poorest hardest, the poorest benefit most from the council tax benefit system, which contributes just under 15 per cent. of total council tax revenues. That point is often missed out from the debate for what I assume are entirely honourable reasons.

On the Gershon review, this morning I congratulated local authorities at the conference of the Chartered Institute of Public Finance and Accountancy on their success in reaching their Gershon targets a year early, and I am happy to repeat those congratulations.